Apple has promised that it will upgrade its outclassed Apple TV. The product was dubbed “fairly useless” when it hit the shops and has been outclassed even by the Microsoft Xbox 360. The expensive gizmo costs $229 compared to Roku’s $99 too.

Now analysts Piper Jaffray have publicly predicted that Apple TV will get a software and hardware upgrade very soon. They believe Apple will integrate its TV product with iTunes, offering a subscription service priced at $30 to $40 a month for all-you-can watch telly.

Gene Munster,managing director and senior research analyst at Piper Jaffray, claims it will not only pick up a live TV signal, but also has DVR programming and can sync with a host of other Apple products like iPods, iPhones and Macs. All good stuff but is there any proof of this? Only that he has stick his balls very hugely on the line in making such a prediction, and some people think he must have been briefed by Apple to make such claims.

Munster himself denies such a briefing and claims it is all on the evidence. Apple chief operating officer Tim Cook stated just last month that the company would continue to sink money into Apple TV because it believes “there is something there for us in the future.” Apple has also maintained patents dealing with digital video recording and has teamed up with LG in a five-year, $500 million deal to produce LCD screens.

HP and Dell have wandered into this territory and walked out again. Apple has had its own problems working in the telly market. Margins in the TV market are incredibly low, particularly at the moment and Apple loves high margins. We guess it all makes sense.